Oct. 11 (Bloomberg) -- China is poised to post its first
slowdown in export growth in three months, a result that may
understate the strength of demand after fake reports inflated
figures in the year-earlier period.

Growth from last month through April 2014 will be
“depressed” because of a high basis for comparison, Credit
Agricole CIB says. Overseas shipments probably grew 5.5 percent
in September from a year earlier, according to a Bloomberg News
survey ahead of tomorrow’s customs-administration report in
Beijing, down from August’s 7.2 percent and 9.8 percent in
September 2012.

The comparisons will complicate investors’ ability to gauge
the strength of any economic rebound after two manufacturing
gauges trailed projections in September, limiting a recovery
that began earlier in the quarter. Additional skepticism over
trade figures builds on broader questions about the quality of
Chinese data from gross domestic product to jobs.

“The trade numbers in the next couple of months,
especially on the export side, will not be a good reflection of
demand for Chinese products abroad or overall economic activity,
because they will be artificially depressed from what happened a
year earlier,” said Dariusz Kowalczyk, senior economist and
strategist at Credit Agricole in Hong Kong.

Citigroup Inc. and Everbright Securities Co. researchers
also said September’s gains may be understated because of last
year’s data distortions. Kowalczyk estimates 1 percent growth in
China’s exports for September, putting him at the low end of 46
projections ranging as high as 8.2 percent. He sees a “small
contraction” in October, citing over-reporting of export gains.

The General Administration of Customs didn’t respond to a
faxed request for comment from Bloomberg News.

Import Growth

The agency will also report tomorrow that imports rose 7
percent last month from a year earlier, equal to August’s pace,
with a trade surplus of $26.2 billion after $28.5 billion in
August, based on the median estimates of analysts surveyed by
Bloomberg News.

The customs administration has no plans to revise January-April trade figures, Zheng Yuesheng, an agency spokesman, told
reporters in July. The data for those months reflect arbitrage-related trade, and current figures with respect to Hong Kong
trade are true to facts, he said at the time.

Bilateral trade data reported by China and Hong Kong showed
widening differences over 2011 and 2012, with Hong Kong passing
the U.S. in November to become the biggest export market in
China’s figures. Since June, Hong Kong has returned to third
place behind the U.S. and European Union.

Verify Documents

The customs administration may have no intent to revise
data because it’s too difficult to verify documentation, said
Ding Shuang, senior China economist at Citigroup in Hong Kong.
“The customs agency can say that all its numbers have documents
to back them up, although some documents are in fact forged.”

Even with the distortions, weak exports aren’t a “major
drag on growth, as domestic demand, not external demand, will
decide China’s growth performance,” said Xu Gao, chief
economist with Everbright Securities in Beijing, who previously
worked at the World Bank.

China’s National Bureau of Statistics is due to report
third-quarter growth data Oct. 18 along with figures for
September industrial production and retail sales and January-September fixed-asset investment. The bureau will report last
month’s data on consumer and producer prices on Oct. 14. The
People’s Bank of China will provide September numbers for money
supply, credit and foreign-exchange reserves by Oct. 15.

Defend Goal

Premier Li Keqiang has rolled out fiscal support measures
such as spending on railways and tax cuts to defend a goal of
7.5 percent economic expansion this year. Li said in a speech in
Brunei yesterday that growth exceeded 7.5 percent in the first
nine months of the year, a sign the government will next week
report success in arresting a two-quarter slowdown.

Elsewhere today in the Asia-Pacific region, New Zealand
said food prices were unchanged in September from the previous
month, while India may say industrial-production gains slowed in
August, based on an analyst survey. In Europe, Germany said
consumer prices rose 1.4 percent last month from a year earlier,
matching a preliminary figure.

A report on consumer confidence this month will be released
in the U.S., as congressional Republicans entered talks with
President Barack Obama about avoiding default and ending a
partial government shutdown.

In China, the distortions may focus attention on other
parts of the customs administration’s report, such as month-on-month changes, which would be free from any comparisons to last
year’s figures. In addition, the agency publishes breakdowns by
countries and markets, and exports to the U.S. and European
Union didn’t exhibit the kinds of irregularities seen in the
Hong Kong figures.

Too Early

Steve Wang, Hong Kong-based chief China economist with
Reorient Financial Markets Ltd., said it’s too early for the
effects of inflated data to show in September or October. The
inflated figures mainly occurred with a few trading partners
including Hong Kong and Taiwan, so the effects “should be
visible for these partners if there is any,” Wang said.

He said he sees “fairly stable” export gains of about 8
percent in the coming months.

While China’s exports may now start to show some effects
from last year’s inflated figures, the influence will become
clearer in early 2014, Citigroup’s Ding said. “It’s very likely
that Chinese exports will show year-on-year declines in the
first quarter,” he said.